Cengage slides more; CHG breaks; Raven, Metals USA, Walter, Merrill, Town Sports tweak deals

By Sara Rosenberg

New York, Nov. 13 - Cengage Learning Acquisitions Inc.'s extended and non-extended term loans continued their downward spiral in the secondary market on Tuesday, which first started last week with the release of quarterly numbers.

Also, CHG Healthcare Services shifted some funds between its first- and second-lien term loans, lowered pricing on both tranches and then freed up for trading above their original issue discount prices.

In more news, Raven Power Finance upsized its term loan B due to strong demand and set pricing at the tight end of talk, Metals USA Inc. downsized its term loan, and Walter Investment Management Corp. lifted the size of its credit facility while reducing the coupon on its term loan.

Continuing on the topic of changes, Merrill Communications LLC increased the spread on its first-lien term loan and Town Sports International Holdings Inc. cut the size of its add-on deal.

And, in other primary happenings, Entercom Communications Corp. and Arch Coal Inc. released price talk with launch, Atlas Iron Ltd. came out with guidance in preparation for its meeting and Patheon Inc. revealed timing on its credit facility.

Cengage down again

Cengage's term loans were weaker on the day, extending losses that started late last week on the back of fiscal first quarters results being announced, according to a trader.

The extended term loan was quoted at 72 bid, 73 offered, down from 76 bid, 78 offered, and the non-extended term loan was quoted at 75 bid, 76 offered, down from 79½ bid, 81½ offered, the trader said. On Thursday, prior to earnings, the extended term loan was seen at 88 bid, 88½ offered and the non-extended loan was seen at 93 bid, 93½ offered.

On Thursday night, the company released first-quarter fiscal 2013 results that showed net income of $13.2 million, compared to net income of $131.5 million in the prior year, revenues of $538.3 million, a 22.2% decline from $691.9 million in the first quarter of fiscal 2012 and adjusted EBITDA of $233.1 million, a 33.2% drop from $348.8 million in the previous year.

Cengage is a Stamford, Conn.-based provider of teaching, learning and research services for the academic, professional and library markets.

CHG Healthcare restructures

CHG Healthcare Services upsized its first-lien term loan B (B1/B) to $475 million from $450 million and cut pricing to Libor plus 375 basis points from talk of Libor plus 400 bps to 425 bps, according to a market source.

The first-lien term loan still has a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year.

With the first-lien size increase, the second-lien term loan (Caa1/CCC+) was trimmed to $190 million from $215 million and pricing was flexed to Libor plus 775 bps from talk of Libor plus 800 bps to 825 bps, the source continued.

As before, the second-lien term loan has a 1.25% Libor floor, an original issue discount of 98 and call protection of 103 in year one, 102 in year two and 101 in year three.

Furthermore, the most favored nations pricing provision was extended to the life of the applicable loan from 12 months, the source remarked.

CHG starts trading

With terms firmed up, CHG Healthcare's credit facility made its way into the secondary market, with the first-lien term loan quoted at 99½ bid, par ¼ offered, and the second-lien term loan quoted at 98½ bid, a trader said.

Goldman Sachs & Co., Barclays Capital Inc., Citigroup Global Markets Inc. and Jefferies & Co. are leading the $765 million credit facility, which also includes a $100 million revolver (B1/B).

Proceeds will be used to help fund the purchase of the company by Leonard Green & Partners and Ares Management LLC from J.W. Childs Associates LP. Existing management will retain a significant equity interest in the company.

Closing is expected by the end of the year, subject to customary conditions.

CHG is a Salt Lake City-based health care staffing firm.

Raven revises deal

Back in the primary, Raven Power Finance, a portfolio company of Riverstone Holdings LLC, lifted its six-year first-lien term loan B to $175 million from $150 million and firmed pricing at Libor plus 600 bps, the low end of the Libor plus 600 bps to 650 bps talk, according to a market source.

Unchanged was the 1.25% Libor floor, original issue discount of 98 and call protection of non-callable for one year, then at 102 in year two.

UBS Securities LLC is leading the deal that is expected to allocate on Wednesday.

Proceeds will be used to help fund the purchase of three Maryland coal-fired power plants from Exelon for about $400 million, and because of the term loan B upsizing, less equity will be used for the transaction, the source explained.

Closing is expected this quarter.

Metals USA cuts size

Metals USA trimmed its seven-year first-lien covenant-light term loan (B2/B+) to $225 million from $275 million but left pricing at Libor plus 500 bps with a 1.25% Libor floor and an original issue discount of 99, according to a market source.

As before, the loan has 101 hard call protection for one year.

Lead bank, Credit Suisse Securities (USA) LLC, was seeking commitments on Tuesday and expects to give out allocations on Wednesday, the source remarked.

Proceeds will be used to refinance 11 1/8% senior secured notes due 2015 and for general corporate purposes, including working capital. Due to the term loan downsizing, the company won't pay down some of its ABL revolver, the source added.

Metals USA is a Fort Lauderdale, Fla.-based provider of products and services in the heavy carbon steel, flat-rolled steel, non-ferrous metals and building products markets.

Walter Investment reworked

Walter Investment upsized its first-lien term loan to $700 million from $600 million and its revolver to $125 million from $100 million, according to a market source.

Also, pricing on the term loan was reduced to Libor plus 450 bps from talk of Libor plus 475 bps to 500 bps, but the 1.25% Libor floor, original issue discount of 99 and 101 repricing protection for one year were left intact, the source said.

Commitments were due at 5 p.m. ET on Tuesday, the source continued.

Credit Suisse Securities (USA) LLC and Morgan Stanley Senior Funding Inc. are leading the now $825 million five-year senior secured credit facility (B1/B+) that will be used to repay all borrowings under a roughly $444 million first-lien term loan and for working capital and general corporate purposes.

Walter Investment is a Tampa, Fla.-based asset manager, mortgage servicer and mortgage portfolio owner specializing in less-than-prime, non-conforming and other credit-challenged mortgage assets.

Merrill flexes higher

Merrill Communications lifted the coupon on its $455 million first-lien term loan (B3/B-) to Libor plus 900 bps from Libor plus 750 bps and left the 1.5% Libor floor, original issue discount of 98 and repricing protection of 103 in year one, 102 in year two and 101 in year three unchanged, according to a market source.

The $485 million five-year credit facility also includes a $30 million revolver (B1/B+), and the company is also getting $150 million of 51/2-year second-lien notes (Caa3/CCC) that were privately negotiated.

Credit Suisse Securities (USA) LLC is leading the deal that will be used to refinance existing bank debt.

Merrill is a St. Paul, Minn.-based provider of technology-enabled services for the financial, legal, health care, real estate and other corporate markets.

Town Sports downsizes

Town Sports reduced the size of its add-on term loan to $60 million from $75 million and left price talk at Libor plus 450 bps with a 1.25% Libor floor and an original issue discount in the 99½ area, according to a market source.

Spread and Libor floor are in line with existing term loan pricing, and both the add-on and existing debt will have 101 soft call protection for one year.

Deutsche Bank Securities Inc. is leading the deal that will be used with cash on hand to pay a special one-time cash dividend to stockholders. The size of the dividend is being reduced because of the term loan downsizing.

Closing is expected to take place this month.

Town Sports is a New York-based owner and operator of fitness clubs.

Entercom sets talk

Also on the primary front, Entercom launched with a call on Tuesday a $347.5 million term loan B, and talk on the deal came out at Libor plus 375 bps to 400 bps with a 1.25% Libor floor, a par offer price and 101 soft call protection for one year, according to a market source.

Proceeds will be used to reprice an existing $347.5 million term loan B from Libor plus 500 bps with a 1.25% Libor floor.

Bank of America Merrill Lynch is the lead bank on the deal.

Entercom is a Bala Cynwyd, Pa.-based radio broadcasting company.

Arch Coal reveals guidance

Arch Coal launched its $250 million incremental covenant-light senior secured term loan (Ba3) due 2018 in the afternoon with price talk of Libor pus 450 bps with a 1.25% Libor floor and an original issue discount of 99, according to a market source.

Pricing on the loan matches existing term loan pricing.

Commitments are due at noon ET on Friday, the source added.

Bank of America Merrill Lynch, PNC Capital Markets LLC, Morgan Stanley Senior Funding Inc., Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC are leading the deal that will be used, along with $350 million of senior unsecured notes due 2019, for general corporate purposes.

Completion of the new term loan would reduce the size of the company's revolver to $350 million from $600 million.

Arch Coal is a St. Louis-based coal producer and marketer.

Sidera launches

Sidera Networks Inc. launched its $375 million credit facility on Tuesday, with terms coming out as outlined prior to the bank meeting, according to a market source.

The facility consists of a $50 million five-year revolver, and a $325 million six-year term loan B that is talked at Libor plus 400 bps to 425 bps with a 1.25% Libor floor, an original issue discount of 99½ and 101 soft call protection for one year.

SunTrust Robinson Humphrey Inc. is the lead bank on the deal that will be used to refinance an existing credit facility.

Commitments are due on Nov. 28.

Sidera is a New York-based provider of dark fiber, colocation and advanced network services.

Atlas Iron pricing

Atlas Iron released talk of Libor plus 550 bps with a 1.25% Libor floor and an original issue discount of 98 on its $325 million five-year first-lien term loan (B+) that will launch with a bank meeting on Wednesday morning, according to a market source.

The loan has call protection of 102 in year one and 101 in year two, the source said.

Lead bank, Credit Suisse Securities (USA) LLC, will be asking for commitments by noon ET on Nov. 21, the source said.

Proceeds will be used for general corporate purposes and to fund the company's Horizon 1 expansion.

Atlas is a Perth, Australia-based iron ore company.

Patheon sets meeting

Patheon disclosed timing on its $650 million senior secured credit facility (B+) as a bank meeting has been scheduled for 9:30 a.m. ET in New York on Thursday, a market source said.

The facility consists of an $85 million revolver and a $565 million term loan B, the source continued.

According to filings with the Securities and Exchange Commission, the revolver will have a five-year maturity, pricing of Libor plus 475 bps and a 50 bps unused fee that will be reduced to 37.5 bps when the first-lien leverage ratio is less than 3 times.

The filings also said that the term loan B will have a seven-year maturity, be covenant-light, have pricing of Libor plus 475 bps with a 1.25% Libor floor and include 101 soft call protection for one year.

Patheon lead banks

Morgan Stanley Senior Funding Inc., UBS Securities LLC, Credit Suisse Securities (USA) LLC and KeyBanc Capital Markets LLC are leading Patheon's credit facility.

Proceeds, along with up to $30 million of equity from JLL Partners Fund V LP, will be used to fund the $255 million acquisition of Banner Pharmacaps from VION NV, repurchase $280 million of existing senior secured notes, repay revolver debt and for general corporate purposes.

Closing is expected by year-end, subject to regulatory approvals and other customary conditions.

Pro forma leverage through the bank debt is 4 times and total leverage is 4.1 times.

Patheon is a Durham, N.C.-based provider of contract development and manufacturing services to the pharmaceutical industry. Banner is a High Point, N.C.-based specialty pharmaceutical business dedicated to the research, development and manufacturing of gelatin-based dosage forms.

P2 fills out

In other news, P2 Energy Solutions Inc.'s credit facility is oversubscribed and the hope is that the transaction will allocate later this week, a market source said.

The $355 million facility consists of a $25 million revolver (B1), a $220 million first-lien term loan (B1) and a $110 million second-lien term loan (Caa1).

The first-lien term loan is talked at Libor plus 475 bps with a 1.25% Libor floor, an original issue discount of 99 and 101 soft call protection for one year, and the second-lien term loan is talked at Libor plus 875 bps with a 1.25% Libor floor, a discount of 98½ and call protection of 103 in year one, 102 in year two and 101 in year three.

Jefferies & Co. is leading the deal that will refinance an existing credit facility and pay a distribution to shareholders.

Total leverage is 5.7 times.

P2 is a Denver-based provider of software and data solutions to the upstream oil and gas industry.

Tallgrass closes

Tallgrass Energy Partners LP completed its roughly $1.8 billion acquisition of Kinder Morgan Interstate Gas Transmission, Trailblazer Pipeline Co., the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming and Kinder Morgan's 50% interest in the Rockies Express Pipeline from Kinder Morgan Energy Partners LP, according to a news release.

For the transaction, Tallgrass got a new senior secured credit facility (Ba3/BB+) that includes an $875 million six-year term loan B priced at Libor plus 400 bps with a 1.25% Libor floor. The B loan was sold at an original issue discount of 99 and has 101 soft call protection for one year.

The deal also provides for a $150 million five-year revolver priced at Libor plus 400 bps with a 50 bps undrawn fee and sold at a discount of 99.

Tallgrass delayed-draw loan

In addition, Tallgrass' facility has a five-year, delayed-draw for 18 months term loan, of which about $150 million was allocated with the ability for that size to increase. Pricing is Libor plus 400 bps with a 0.75% Libor floor and a 100 bps undrawn fee, and the debt was sold at a discount of 99.

During syndication, the delayed-draw loan saw the addition of the Libor floor and the undrawn fee was increased from 50 bps. Also, at launch, the size was outlined at $250 million, but it allocated at the smaller amount.

Barclays was the bookrunner on the deal and a joint lead arranger with Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and RBC Capital Markets LLC.

Tallgrass, a midstream gas pipeline system, is owned by management, Kelso & Co. and a limited group of investors led by the Energy & Minerals Group, including Magnetar Capital.

Garda buyout wraps

Apax Partners closed on its acquisition of Garda World Security Corp. for C$12 per share in cash, according to a news release.

For the buyout, Garda got a new $350 million secured credit facility (Ba1/BB) that consists of a $100 million five-year revolver and a $250 million seven-year term loan B.

Pricing on the B loan is Libor plus 350 bps with a 1% Libor floor, and it was sold at a discount of 991/2. The debt includes 101 soft call protection for one year.

During syndication, term loan B pricing was reduced from talk of Libor plus 375 bps to 400 bps and the discount was revised from 99.

RBC Capital Markets, Bank of America Merrill Lynch, TD Securities (USA) LLC and Mizuho Securities USA Inc. led the deal.

Garda is a Montreal-based provider of security and cash logistics services.

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